In the cae below identify the subject matter of the controversy, whe.pdf

In the cae below identify the subject matter of the controversy, whether the common law or the
UCC (Artlce 2) would cover the contractual issues, and explain the reasons for your conclusions.
Also, discuss when, in general, the UCC (Article 2) governs contracts and when the common law
governs.
Kurt N. Aslakson, et al., Appellants, v. Home Savings Association, Respondent, Upper
Northwest Payment Plans Co., Respondent
No. C6-87-1497
Court of Appeals of Minnesota
416 N.W.2d 786; 1987 Minn. App. LEXIS 5110; 6 U.C.C. Rep. Serv. 2d (Callaghan) 35
December 3, 1987, Decided December 15, 1987, Filed
PRIOR HISTORY: [**1] Appeal from Hennepin County, District Court, Hon. Ann
Montgomery, Judge.
DISPOSITION: Affirmed. CASE SUMMARY:
PROCEDURAL POSTURE: Appellant homeowners sought review of the decision from the
Hennepin County, District Court (Minnesota), which granted summary judgment in favor of
respondents, savings association and payment plan, on the homeowners' claim of tortious
interference with contract.
OVERVIEW: The homeowners entered into a conditional sales contract to purchase a mobile
home. Subsequently the contract was assigned to the savings associationThe homeowners argued
that thetrial court erred in determining, as a matter of law, that their claims of wrongful
interference with contracts were invalid. The court determined that the trial court had correctly
determined that a contract between the homeowners and a subsequent buyer could not arise
absent performance of a condition precedent, which was the approval of the subsequent buyer's
assumption of the loan. Even if this court were to determine that valid contracts existed between
the homeowners and prospective buyers, the issue of justification would have to be addressed
and the savings association and payment plan would have prevailed. Credit checks and equity
interests were commercially reasonable assurances and could not be met by the prospective
buyers. The savings association and payment plan were within their right to refuse the
assignment.
OUTCOME: The court affirmed the decision from the trial court.
CORE TERMS: mobile home, materially, prospective buyer, breach of contract, assignee,
buyer's, purchase agreement, assignor, summary judgment, down payment, substantial interest,
conditional, assurances, assigned, inducing, delegate, condition precedent, contractual,
contingent, delegation, tortious interference, credit check, right to refuse, wrongful interference,
contractual duties, equity interest, delegating, purchaser, happening, default

LexisNexis(R) Headnotes
1 of 7 4/4/12 5:11 PM
http://www.lexisnexis.com/lnacui2api/delivery/PrintDoc.do?jo...
Torts > Business Torts > Commercial Interference > Contracts > General Overview
[HN1] "Interference with contract" is somewhat broader than "inducing breach of contract" in
that the former includes any act injuring or destroying persons or property which retards, makes
more difficult, or prevents performance, or makes performance of a contract of less value to the
promisee.
Contracts Law > Breach > Causes of Action > Elements of Claims
Torts > Business Torts > Commercial Interference > Contracts > Elements
[HN2] The basic elements for either interference with contract or inducing breach of contract
are: (1) existence of a contract; (2) alleged wrongdoer's knowledge of the contract;(3) his
intentional procurement of its breach; (4) without justification; and (5) damages resulting
therefrom.
Commercial Law (UCC) > Sales (Article 2) > General Overview
Contracts Law > Breach > General Overview
Contracts Law > Third Parties > Delegation of Performance
[HN3] Minn. Stat. § 336.2-210 (1978) provides that a party may perform his duty through a
delegate unless otherwise agreed or unless the other party has a substantial interest in having his
original promisor perform or control the acts required by the contract. No delegation of
performance relieves the party delegating of any duty to perform or any liability for breach.
Unless otherwise agreed all rights of either seller or buyer can be assigned except where the
assignment would materially change the duty of the other party, or increase materially the burden
or risk imposed on him by his contract, or impair materially his chance of obtaining return
performance. A right to damages for breach of the whole contract or a right arising out of the
assignor's due performance of his entire obligation can be assigned despite agreement otherwise.
Commercial Law (UCC) > Sales (Article 2) > Breach, Repudiation & Excuse > Assurances of
Performance Commercial Law (UCC) > Sales (Article 2) > Form, Formation & Readjustment >
Third Party Contracts
Contracts Law > Third Parties > Delegation of Performance
[HN4] Minn. Stat. § 336.2-210 (1978) provides that unless the circumstances indicate the
contrary a prohibition of assignment of "the contract" is to be construed as barring only the
delegation to the assignee of the assignor's performance. An assignment of "the contract" or of
"all my rights under the contract" or an assignment in similar general terms is an assignment of
rights and unless the language or the circumstances indicate the contrary, it is a delegation of
performance of the duties of the assignor and its acceptance by the assignee constitutes a promise

by him to perform those duties. This promise is enforceable by either the assignor or the other
party to the original contract. The other party may treat any assignment which delegates
performance as creating reasonable grounds for insecurity and may without prejudice to his
rights against the assignor demand assurances from the assignee.
Contracts Law > Contract Conditions & Provisions > Conditions Precedent
[HN5] A condition precedent, as known in the law, is one, which is to be performed before the
agreement of the parties becomes operative. A condition precedent calls for the performance of
some act or the happening of some event after the contract is entered into, and upon the
performance or happening of which its obligation is made to depend.
Contracts Law > Breach > General Overview
Contracts Law > Contract Conditions & Provisions > Conditions Subsequent
Governments > Local Governments > Fire Departments
[HN6] A conditional promise prevents a party from acquiring any rights under the contract
unless those conditions occur. A breach of contract does not occur when a contract is conditioned
on third-party approval and the approval is not received. If the event required by the condition
does not occur, there can be no breach of contract, since the contract is unenforceable.
[HN7] Liability for wrongful interference may be avoided by showing that the a respondent was
justified by a lawful object which he had a right to assert.
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[HN8] Justification is the most common affirmative defense to an action for interference. It is
employed to denote the presence of exceptional circumstances, which show that no tort was in
fact committed and lawful excuse, which excludes actual or legal malice. The standard for
proving justification is reasonable conduct under all the circumstances of the case. When one
acts in pursuance of a superior or equal right, that person is legally justified in his action.
Contracts Law > Negotiable Instruments > Enforcement > Duties & Liabilities of Parties >
Types of Parties > Assignees & Assignors
Contracts Law > Performance > Novation
[HN9] Minn. Stat. § 336.2-210(5) permits a non-assigning party to "demand assurances from
the assignee." Assurances demanded are to meet commercial standards. Minn. Stat. § 336.2-
609(2).
SYLLABUS
Where prospective purchase of appellants' mobile home was contingent upon buyers'
assumption of appellants' loan and buyers were unable to satisfy respondents' credit checks, the

trial court did not err in finding no inducement of breach of contract nor tortious interference of
contract.
COUNSEL: Robert A. Nicklaus, for Appellant. Robert L. Meller, Jr., for Home Savings
Association. Laura J. Hein, for Upper Northwest Payment Plans.
JUDGES: Huspeni, Presiding Judge, Sedgwick, Judge and Lommen, Judge. *
* Acting as judge of the Court of Appeals by appointment pursuant to Minn. Const. art. 6, § 2.
OPINION BY: HUSPENI
OPINION
[*787] This appeal arises from the grant of summary judgment in favor of respondents on
appellants' claim of tortious
interference with contract. We affirm.
FACTS
Appellants Kurt S. and Jeanette B. Aslakson entered into a conditional sales contract to purchase
a mobile home from Luxury Housing, Inc. on April 11, 1975. Subsequently the contract was
assigned to respondent Home Savings Association (Home). 1
1 The contract provides "all of the rights and remedies of a secured party under the Uniform
Commercial Code," for Home.
[**2] On September 13, 1979, appellants entered into a purchase agreement to sell the mobile
home to Anita Lou Watson. Appellants knew that in order to assume appellants' loan a
prospective buyer would have to submit to a credit check by respondent Upper Northwest
Payment Plan (UNPP) and the purchase agreement between appellants and Watson contained the
following language: "This offer is contingent upon buyer being able to assume the loan." Due
to Watson's record of late payment of debt obligations, UNPP found her credit unsatisfactory.
3 of 7 4/4/12 5:11 PM
A second purchase agreement to sell appellants' mobile home was entered into on January 2,
1980. The prospective buyers, Gayle and Judith Hepola, had been denied credit two months
earlier on another mobile home purchase. Home declined to consent to transfer based upon
Hepolas' insufficient credit history. Home later acquiesced to Hepolas' request for credit.
When Home sent its credit application to the Hepolas, it also sent a letter requiring a down
payment. The credit insurer required a down payment equal to two to four monthly payments as
part of its coverage on the original conditional sales contract. This down payment is rarely
waived.
[*788] [**3] On February 28, 1980, Home agreed to an assumption by the Hepolas. The Hepolas
subsequently declined to purchase.
On March 25, 1980, appellants commenced a lawsuit against respondents alleging respondents

wrongfully rejected applications of appellants' assignees and alleging interference by
respondents with appellants' contracts. Appellants further alleged the conditional sales contract
was freely assignable and respondents could not set conditions for an assumption. Appellants
sought compensatory damages, attorney fees, injunctive relief and punitive damages.
A third attempt to purchase appellants' mobile home was successful. On April 25, 1980,
appellants entered into a purchase agreement with Timothy Raidt. Within five days, Home
consented to Raidt's assumption and the sale was eventually concluded. Raidt's down payment
was waived through efforts made by Home.
On March 6, 1987, Home moved for summary judgment. UNPP joined in the motion. After oral
arguments heard April 9, 1987, the trial court granted respondents' motion for summary
judgment on April 21, 1987. Judgment was entered May 5, 1987, and appeal is taken from the
judgment.
ISSUE
Did the trial court err in determining, [**4] as a matter of law, that appellants' claims of
respondents' wrongful
interference with contracts were invalid?
ANALYSIS
The basis of appellants' argument is not that there are material facts in dispute. Instead,
appellants assert that the undisputed facts as presented support their cause of action for tortious
interference of contract and inducing breach of contract. Therefore, argue appellants, summary
judgment should have been awarded to them.
The Minnesota Supreme Court distinguishes interference with contract from inducing breach of
contract:
[HN1] "Interference with contract" is somewhat broader than "inducing breach of contract" in
that the former includes "'any act injuring or destroying persons or property which retards,
makes more difficult, or prevents performance, or makes performance of a contract of less value
to the promisee.'"
Royal Realty Co. v. Levin, 244 Minn. 288, 291 n.5, 69 N.W.2d 667, 671 n.4 (1955).
Nevertheless, [HN2] basic elements for either interference with contract or inducing breach of
contract are:
(1) existence of a contract;
(2) alleged wrongdoer's knowledge of the contract; (3) his intentional procurement of its
breach;
(4) without [**5] justification; and
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(5) damages resulting therefrom.
Id. at 292, 69 N.W.2d at 671.
With regard to the existence of a contract, the trial court determined there was no valid contract
between appellants and
either of the two prospective buyers.
Since the contract between appellants and respondents is for the sale of goods (the mobile home),
it is governed by Minn. Stat. ch. 336, Minnesota's Uniform Commercial Code. Appellants'
attempt to sell their mobile home to prospective buyers contingent upon assumption of the loan
held by respondents was an attempt to delegate appellants' duty to repay that loan. Appellants'
right to delegate contractual duties is limited by [HN3] Minn. Stat. § 336.2-210 (1978), which
provides in entirety:
(1) A party may perform his duty through a delegate unless otherwise agreed or unless the other
party has a substantial interest in having his original promisor perform or control the acts
required by the contract. No delegation of performance relieves the party delegating of any duty
to perform or any liability for breach.
(2) Unless otherwise agreed all rights of either seller or buyer can be assigned except where the
assignment would materially [**6] change the duty of the other [*789] party, or increase
materially the burden or risk imposed on him by his contract, or impair materially his chance of
obtaining return performance. A right to damages for breach of the whole contract or a right
arising out of the assignor's due performance of his entire obligation can be assigned despite
agreement otherwise.
[HN4] (3) Unless the circumstances indicate the contrary a prohibition of assignment of "the
contract" is to be construed as barring only the delegation to the assignee of the assignor's
performance.
(4) An assignment of "the contract" or of "all my rights under the contract" or an assignment
in similar general terms is an assignment of rights and unless the language or the circumstances
(as in an assignment for security) indicate the contrary, it is a delegation of performance of the
duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform
those duties. This promise is enforceable by either the assignor or the other party to the original
contract.
(5) The other party may treat any assignment which delegates performance as creating
reasonable grounds for insecurity and may [**7] without prejudice to his rights against the
assignor demand assurances from the assignee (section 336.2-609).
Id. (emphasis added).
The first purchase agreement between appellants and Watson was contingent upon Watson being
able to assume appellants' loan. Respondents did not approve Watson due to her unsatisfactory

credit history. Therefore, no contractual agreement between appellants and Watson ever arose.
The second purchase agreement between appellants and the Hepolas also failed because the
Hepolas initially could not pass respondents' credit check.
The trial court determined that respondents' approval of buyers' assumption of the loan was a
condition precedent to any contract between buyer and a subsequent purchaser. The Minnesota
Supreme Court has stated:
[HN5] A condition precedent, as known in the law, is one which is to be performed before the
Lake Company v. Molan, 269 Minn. 490, 498-99, 131 N.W.2d [**8] 734, 740 (1964).
[HN6] A conditional promise prevents a party from acquiring any rights under the contract
unless those conditions occur.
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Lidstrom v. Mundahl, 310 Minn. 1, 4, 246 N.W.2d 16, 18 (1976). Furthermore, a breach of
contract does not occur when a contract is conditioned on third-party approval and the approval
is not received. If the event required by the condition does not occur, there can be no breach of
contract, since the contract is unenforceable. See, e.g., 451 Corporation v. Pension System for
Policemen and Firemen of the City of Detroit, 310 N.W.2d 922, 924 (Minn. 1981).
We believe the trial court correctly determined that a contract between appellants and a
subsequent buyer could not arise absent performance of a condition precedent: respondents'
approval of the subsequent buyer's assumption of the loan. Under the provisions of section
336.2-210, which must govern here, appellants were prohibited from delegating their contractual
duties if respondents had a substantial interest in having appellants perform or if an assignment
would materially increase respondents' burden or risk or impair its chance of obtaining return
performance. Clearly, the relationship [**9] between appellants and respondents is one to which
the statute is directed. In the words of the trial court:
In the instant case, [respondents] had a substantial interest in having [appellants] perform their
obligation. [Appellants] had been determined to be creditworthy. Moreover, [appellants] had
sufficient equity in the mobile home so that [*790] they were unlikely to default. On the other
hand, if [appellants] were allowed to make any assignment they wished, [respondents'] risk on
the contract could have increased materially and the chance of obtaining return performance
could have materially decreased. In fact, [respondents] made a good faith determination that an
assignment to either of the first two potential purchasers would have materially impaired
[respondents'] contractual rights. Thus, [respondents] had an absolute right to refuse

[appellants'] request to assign their contractual obligations to others.
Additionally, even if this court were to determine that valid contracts existed between appellants
and prospective buyers, the issue of respondents' justification would have to be addressed and
respondents would prevail here too.
According [**10] to the Minnesota Supreme court, [HN7] "liability for wrongful interference
may be avoided by showing that the [respondent] was justified by a lawful object which he had a
right to assert." Bennett v. Storz Broadcasting Co., 270 Minn. 525, 532, 134 N.W.2d 892, 897
(1965).
The Minnesota Supreme Court has stated:
[HN8] Justification is the most common affirmative defense to an action for interference. It is
employed to denote the presence of exceptional circumstances which show that no tort was in
fact committed and lawful excuse which excludes actual or legal malice.
Johnson v. Radde, 293 Minn. 409, 411, 196 N.W.2d 478, 480 (1972).
The standard for proving justification is reasonable conduct under all the circumstances of the
case. Bennett at 537, 134 N.W.2d at 900. When one acts in pursuance of a superior or equal
right, that person is legally justified in his action. Id. at 532, 134 N.W.2d at 897.
The trial court determined respondents "had a substantial interest in having [appellants] perform
their obligation." The trial court further determined appellants had been deemed "credit
worthy" by respondents and they had established sufficient equity in their [**11] mobile home
to make it unlikely they would default. If appellants delegated their duty to pay or assigned their
rights to the contract, respondents' risk would increase materially.
Respondents did not refuse assignment of appellants' obligation, they merely imposed realistic
conditions on the assignment. Respondents required the proposed assignee qualify as borrower
pursuant to a standard credit check and make a down payment to establish an equity interest in
the mobile home.
[HN9] Minn. Stat. § 336.2-210(5) permits the nonassigning party to "demand assurances from
the assignee." Assurances demanded are to meet commercial standards. Minn. Stat. § 336.2-
609(2). Credit checks and equity interests are commercially reasonable assurances and could not
be met by the prospective buyers. Respondents were within their right
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to refuse appellants' assignment.
DECISION
The trial court's grant of summary judgment in favor of respondents regarding appellants' claim
of tortious interference of contract is affirmed.
Affirmed.

Solution
This appeal arises from the grant of summary judgment in favor of respondents on appellants'
claim of tortious interference with contract.
FACTS
Appellants Kurt S. and Jeanette B. Aslakson entered into a conditional sales contract to purchase
a mobile home from Luxury Housing, Inc. on April 11, 1975. Subsequently the contract was
assigned to respondent Home Savings Association (Home).
On September 13, 1979, appellants entered into a purchase agreement to sell the mobile home to
Anita Lou Watson. Appellants knew that in order to assume appellants' loan a prospective buyer
would have to submit to a credit check by respondent Upper Northwest Payment Plan (UNPP)
and the purchase agreement between appellants and Watson contained the following language:
"This offer is contingent upon buyer being able to assume the loan." Due to Watson's record of
late payment of debt obligations, UNPP found her credit unsatisfactory.
A second purchase agreement to sell appellants' mobile home was entered into on January 2,
1980. The prospective buyers, Gayle and Judith Hepola, had been denied credit two months
earlier on another mobile home purchase. Home declined to consent to transfer based upon
Hepolas' insufficient credit history. Home later acquiesced to Hepolas' request for credit.
When Home sent its credit application to the Hepolas, it also sent a letter requiring a down
payment. The credit insurer required a down payment equal to two to four monthly payments as
part of its coverage on the original conditional sales contract. This down payment is rarely
waived.
788 On February 28, 1980, Home agreed to an assumption by the Hepolas. The Hepolas
subsequently declined to purchase.
On March 25, 1980, appellants commenced a lawsuit against respondents alleging respondents
wrongfully rejected applications of appellants' assignees and alleging interference by
respondents with appellants' contracts. Appellants further alleged the conditional sales contract
was freely assignable and respondents could not set conditions for an assumption. Appellants
sought compensatory damages, attorney fees, injunctive relief and punitive damages.
A third attempt to purchase appellants' mobile home was successful. On April 25, 1980,
appellants entered into a purchase agreement with Timothy Raidt. Within five days, Home
consented to Raidt's assumption and the sale was eventually concluded. Raidt's down payment
was waived through efforts made by Home.
On March 6, 1987, Home moved for summary judgment. UNPP joined in the motion. After oral
arguments heard April 9, 1987, the trial court granted respondents' motion for summary

judgment on April 21, 1987. Judgment was entered May 5, 1987, and appeal is taken from the
judgment.
ISSUE
Did the trial court err in determining, as a matter of law, that appellants' claims of respondents'
wrongful interference with contracts were invalid?
ANALYSIS
The basis of appellants' argument is not that there are material facts in dispute. Instead,
appellants assert that the undisputed facts as presented support their cause of action for tortious
interference of contract and inducing breach of contract. Therefore, argue appellants, summary
judgment should have been awarded to them.
The Minnesota Supreme Court distinguishes interference with contract from inducing breach of
contract:
"Interference with contract" is somewhat broader than "inducing breach of contract" in that
the former includes "`any act injuring or destroying persons or property which retards, makes
more difficult, or prevents performance, or makes performance of a contract of less value to the
promisee.'
Nevertheless, basic elements for either interference with contract or inducing breach of contract
are:
(1) existence of a contract
(2) alleged wrongdoer's knowledge of the contract
(3) his intentional procurement of its breach
(4) without justification; and (5) damages resulting therefrom.
With regard to the existence of a contract, the trial court determined there was no valid contract
between appellants and either of the two prospective buyers.Since the contract between
appellants and respondents is for the sale of goods (the mobile home), it is governed by Minn.
Stat. ch. 336, Minnesota's Uniform Commercial Code. Appellants' attempt to sell their mobile
home to prospective buyers contingent upon assumption of the loan held by respondents was an
attempt to delegate appellants' duty to repay that loan. Appellants'right to delegate contractual
duties is limited by Minn. Stat. § 336.2-210 (1978), which provides in entirety:
(1) A party may perform his duty through a delegate unless otherwise agreed or unless the other
party has a substantial interest in having his original promisor perform or control the acts
required by the contract. No delegation of performance relieves the party delegating of any duty
to perform or any liability for breach.
(2) Unless otherwise agreed all rights of either seller or buyer can be assigned except where the
assignment would materially change the duty of the other *789 party, or increase materially the
burden or risk imposed on him by his contract, or impair materially his chance of obtaining

return performance. A right to damages for breach of the whole contract or a right arising out of
the assignor's due performance of his entire obligation can be assigned despite agreement
otherwise.
(3) Unless the circumstances indicate the contrary a prohibition of assignment of "the contract"
is to be construed as barring only the delegation to the assignee of the assignor's performance.
(4) An assignment of "the contract" or of "all my rights under the contract" or an assignment
in similar general terms is an assignment of rights and unless the language or the circumstances
(as in an assignment for security) indicate the contrary, it is a delegation of performance of the
duties of the assignor and its acceptance by the assignee constitutes a promise by him to perform
those duties. This promise is enforceable by either the assignor or the other party to the original
contract.
(5) The other party may treat any assignment which delegates performance as creating
reasonable grounds for insecurity and may without prejudice to his rights against the assignor
demand assurances from the assignee
The first purchase agreement between appellants and Watson was contingent upon Watson being
able to assume appellants' loan. Respondents did not approve Watson due to her unsatisfactory
credit history. Therefore, no contractual agreement between appellants and Watson ever arose.
The second purchase agreement between appellants and the Hepolas also failed because the
Hepolas initially could not pass respondents' credit check.
The trial court determined that respondents' approval of buyers' assumption of the loan was a
condition precedent to any contract between buyer and a subsequent purchaser. The Minnesota
Supreme Court has stated:
A condition precedent, as known in the law, is one which is to be performed before the
A conditional promise prevents a party from acquiring any rights under the contract unless those
conditions occur. Lidstrom v. Mundahl, 310 Minn. 1, 4, 246 N.W.2d 16, 18 (1976). Furthermore,
a breach of contract does not occur when a contract is conditioned on third-party approval and
the approval is not received. If the event required by the condition does not occur, there can be
no breach of contract, since the contract is unenforceable.
We believe the trial court correctly determined that a contract between appellants and a
subsequent buyer could not arise absent performance of a condition precedent: respondents'
approval of the subsequent buyer's assumption of the loan.
Under the provisions of section 336.2-210, which must govern here, appellants were prohibited
from delegating their contractual duties if respondents had a substantial interest in having

appellants perform or if an assignment would materially increase respondents' burden or risk or
impair its chance of obtaining return performance. Clearly, the relationship between appellants
and respondents is one to which the statute is directed. In the words of the trial court:
In the instant case, [respondents] had a substantial interest in having [appellants] perform their
obligation. [Appellants] had been determined to be credit-worthy. Moreover, [appellants] had
sufficient equity in the mobile home so that they were unlikely to default. On the other hand, if
[appellants] were allowed to make any assignment they wished, [respondents'] risk on the
contract could have increased materially and the chance of obtaining return performance could
have materially decreased. In fact, [respondents] made a good faith determination that an
assignment to either of the first two potential purchasers would have materially impaired
[respondents'] contractual rights. Thus, [respondents] had an absolute right to refuse
[appellants'] request to assign their contractual obligations to others.
Additionally, even if this court were to determine that valid contracts existed between appellants
and prospective buyers, the issue of respondents' justification would have to be addressed and
respondents would prevail here too.
The Minnesota Supreme Court has stated:
Justification is the most common affirmative defense to an action for interference. It is employed
to denote the presence of exceptional circumstances which show that no tort was in fact
committed and lawful excuse which excludes actual or legal malice.
The trial court determined respondents "had a substantial interest in having [appellants] perform
their obligation." The trial court further determined appellants had been deemed "credit
worthy" by respondents and they had established sufficient equity in their mobile home to make
it unlikely they would default. If appellants delegated their duty to pay or assigned their rights to
the contract, respondents' risk would increase materially.
Respondents did not refuse assignment of appellants' obligation, they merely imposed realistic
conditions on the assignment. Respondents required the proposed assignee qualify as borrower
pursuant to a standard credit check and make a down payment to establish an equity interest in
the mobile home.
---------------------------------------------------------------------------------------------------------------------
-------------------------------------------------
Following theory supports abovecase problem.
UNIFORM COMMERCIAL CODE (UCC)
The Uniform Commercial Code (UCC) is a "code" or a "collection of statutes." This is the
type of law that may be adopted by all U.S. legislatures, including the U.S. Congress, the
Virginia General Assembly, other state legislatures, and even a county board of supervisors.
Codes are intended by the legislature to create new law in the targeted subject areas.

The other source of law is "case law" or "common law." For centuries, courts have been in the
business of resolving disputes. When a court resolves a particular dispute, the record of this
decision is case law, which may be used as authority in a future case. In future disputes, litigants
may argue that their case is similar to a prior case and that the prior case law should be followed.
Often, to resolve a dispute, a court must interpret the "statutes" or codes created by the
legislature. It is often difficult to determine how a statute or code should be applied to a
particular fact situation. The law is usually written broadly so that it may be applied judicially.
Courts must "fill in" the gaps in the statute.
Commercial
The UCC concerns a wide variety of commercial issues, including the sale of goods, banking and
security interests. The UCC does not apply to:
Uniform
The UCC was intended as a Uniform Model Code that might be adopted by every state
legislature. Prior to the UCC, each state legislature created its own commercial transaction code.
The laws in different states could vary widely. As the nation’s economy matured, interstate
commerce became increasingly important. The variations in state law became a tremendous
problem for businesses and banks dealing across state lines.
Many business people, lawmakers and academics saw a need for a uniform set of laws covering
commercial transactions to facilitate interstate commerce. This would promote interstate
commerce, create more comfort and security for interstate business transactions, increase
competition and lower costs. A national conference of lawmakers, lawyers and college
professors worked for years studying the various commercial laws of the 50 states, debating the
pros and cons of these variations and drafting what they viewed as the best "Uniform
Commercial Code."
This process has continued for decades. New articles are added over time, and specific sections
of existing articles are revised.
The "Uniform Commercial Code" is a model. It is not law in any state unless and until a state
legislature adopts it as the law of that state. Any state can decide not to adopt the UCC or can
decide to make revisions to the code that satisfies that state’s particular heritage or commercial
needs. Accordingly, the UCC is not entirely uniform in all 50 states. Also, each state’s court
system can reach different results when interpreting the code provisions. Business people cannot
assume, therefore, that the law will be exactly the same in each state. Nonetheless, the UCC has
facilitated much greater uniformity of commercial laws.
UCC law, therefore, is derived from three places:
The Uniform Commercial Code Article 2 on the Sale of Goods is basically a codification of
existing commercial law. The UCC drafters tried to write down the generally understood

business practices between merchants for the sale of goods. The UCC "fills in the gaps,"
providing controlling contract terms where the contracting merchants either didn’t agree or just
forgot to discuss the matter. In many commercial transactions, the buyer and seller only discuss
how many goods, how much to pay, and perhaps when delivery or payment is due. It is only
later, after problems arise, that merchants also will discuss or argue about many more specific
terms such as: "Where will the goods be delivered?" or "Is the buyer under any obligation if
the goods are slightly defective?" The UCC answers most of these questions by basically
providing the parties with a "50-page fine print contract," whether they know it or not.
Goods
Goods are "all things which are moveable."{footnote}UCC Section 2-105(1); Ritz-Craft Corp.
v. Stanford Management Group, 800 F. Supp. 1312, 1317 (D. Md. 1992) (holding that a mobile
home falls within the definition of "movable goods" and that the UCC applied).{/footnote}
Lumber, asphalt, concrete, computers, trucks and gift shop greeting cards are all goods. UCC
Article 2 applies to the sale of all such "goods." Note that goods can include items that are now
attached to real estate but can later be "severed" or removed from the real
estate.{footnote}UCC Section 2-105(1); UCC Section 2- 107.{/footnote}This includes stone,
sand and timber, as well as agricultural crops like corn.
The UCC does not apply to any transaction to buy or sell the real estate itself. More importantly,
Article 2 does not cover any service contract like an employment contract for a
salesperson.{footnote}UCC Section 2-102.{/footnote} The UCC also does not apply if labor is a
"significant part" of a contract. A contract for the sale of lumber is definitely a sale of goods,
and Article 2 applies. A contract for carpentry labor only, where the owner is supplying the
material, is definitely a service contract, and Article 2 will not apply.
ontract Creation
Once an offer has been made and accepted, the parties have a binding contract. In order to have a
contract, "consideration must flow both ways." Consideration is any thing of value. When a
lumberyard offers to sell 2,000 spruce studs at $1.79 a piece, this promise is worth something.
When the contractor promises to pay for the 2,000 studs when delivered, this promise also is
worth something. Consideration is flowing both ways. The parties have a contract.
Firm Offers
When a merchant submits an offer in writing to buy or sell goods, the offer is open for a
"reasonable" time.{footnote}UCC Section 2-205.{/footnote} This means there will be a
binding contract if a contractor accepts a material supplier’s firm offer (offer) within a
reasonable time, even though the supplier has not promised to keep the offer open for any
particula
Essential Parts of a Contractr time

Terms Can Be Missing
Essential Elements
When a Written Contract or Confirmation Is Necessary
Exceptions
Written Confirmation

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